APPENDIX II

MANAGEMENT OF THE COMPANY

The names, home addresses and principal occupations of the directors and officers of IOS are as follows:

SECURITIES AND EXCHANGE COMMISSION LITIGATION

INVESTORS OVERSEAS SERVICES

In preparing this paper concerning Investors Overseas

Services we have tried to be responsive to Chairman Patman's
letter of November 7, 1969 to Chairman Budge, which stated:

We would like background information on how this
organization was formed and the circumstances of
the agreement whereby Overseas Investors Services
removed itself from SEC jurisdiction.
We are
interested in the inability of the Commission to
examine the books and records of IOS because of
the latter's argument that such disclosure would
be a violation of foreign law. We are particularly
interested in this organization's activities in this
country, including the number and amount of its
acquisitions and any general patterns which may have
developed therefrom. This would include its influence

in the management of American companies in which it
has acquired an interest.

The Investigation

In early 1965, the Commission's staff first became aware of

the very substantial positions which had been acquired by The Fund of Funds, Ltd. ("FOF") in the shares of several registered investment 1/ companies. FOF was incorporated in Canada but its securities are not sold there. It was operated from Geneva by 1.0.S., Ltd. (S.A.) ("IOS"), a Panama company also controlled from Geneva by a group of expatriate Americans headed by Bernard Cornfeld and Edward M. Cowett. Because of the size of FOF's holdings and the apparent scope of the activities of both FOF and IOS, in early 1965 the Commission directed the staff to conduct an investigation of IOS to determine (1) the impact of the activities of FOF and IOS on registered mutual funds and on the securities markets ard (2) to determine whether FOF, IOS, or any of its other subsidiaries violated the Federal Securities Laws.

1/ A schedule showing the size of FOF's reported holdings at June 30, 1966 is attached as Exhibit A.

At the time the investigation was ordered, IOS was a registered broker-dealer.

It had registered in 1960 because its principal

business then involved the purchase of securities through the use of the jurisdictional means and the sale of such securities to Americans overseas. As a registered broker-dealer, IOS was required to keep copies of its books and records in the United States, or file

an undertaking to produce any or all of its books and records in Washington, D. C. on demand by the Commission. It had filed such an undertaking and consequently was permitted to keep its records and books in Geneva.

The staff's investigation uncovered a number of violations of the Securities Act of 1933 ("Securities Act"), the Securities Exchange Act of 1934 ("Securities Exchange Act") and the Investment Company Act of 1940 ("Investment Company Act").

1. IOS had sold interests in FOF within the jurisdiction of the United States in violation of the registration requirements of both the Securities Act and the Investment Company Act. The prospectuses and selling literature used by IOS to describe FOF contained statements which fell far short of the disclosure standards of the Securities Act and the Securities Exchange Act.

2.

The investigation revealed that IOS was causing registered investment companies to directly execute transactions for their portfolios with certain broker-dealers, or directing such companies to require that their own executing broker-dealers give up a portion of their brokerage commissions to the broker-dealers designed by IOS. IOS or its affiliated persons apparently were able to benefit from such brokerage commissions, although as discussed later, we were stymied in tracing the flow of the monies, which over a relatively short period of time aggregated several millions of dollars, by the

secrecy laws of the Bahamas. IOS also caused the registered investment companies involved to inadequately describe such arrangements

in their prospectuses.

3. The investigations also disclosed that IOS had violated Section 17 (d) of the Investment Company Act in that an investment company under its control engaged in a transaction with certain registered investment companies in which FOF had substantial stock holdings, in violation of the Act. During the investigation, we also conducted an inspection of

a wholly-owned subsidiary of IOS, Investors Continental Services, Ltd. ("ICS"), also a registered broker-dealer, at the principal office of ICS in New York City. During that inspection, the staff found, reviewed and then requested ICS to furnish a copy of a certain letter written by Mr. Cowett to another employee of the IOS organization in Geneva with a copy sent to Mr. Cornfeld. Although the letter was not turned over and apparently destroyed, a hand-written copy of the letter had been made by the Commission's staff when they were in ICS' offices during the inspection. In that letter, Mr. Cowett stated in part:

2/

"As you are probably aware, the ICS files are always
open to complete examination by the NASD or SEC. One improper
paper in the file, if discovered, could lead to a complete
investigation of the entire workings of ICS. Such an examina-
tion would include, in all probability, a review of all corre
spondence coming into the office over a protracted period.
Since the correspondence in any period of three or four or
five days is bound to include at least one daming (sic) letter,
you can see that the results could be disastrous.

"I do not mean to panic everybody involved by this letter and my letter of even date. I can ask no more than that each person involved do his parc in cutting down the extent of our obvious violations."

2/ The full text is set forth in the Commission's order for public proceedings of February 3, 1966, a copy of which is attached as Exhibit B.

After the investigation continued for some period of time,

we concluded that it was necessary to determine the extent of the apparent violations of the registration provisions of the Securities Act and the Investment Company Act. Accordingly, the Commission then demanded

that IOS produce, pursuant to its 1960 undertaking, its customers' records or its records of all transactions or accounts effected by IOS with or for United States citizens or nationals, whichever IOS preferred. Although that undertaking was still in effect, IOS refused to produce the records relying on Swiss secrecy laws. Also, during the course of the investigation, a subpoena was served on the manager of the IOS branch in Puerto Rico for production of the books and records maintained in that office relating to sales of interests in FOF to United States citizens. In response, in December 1965, IOS brought an action in the United States Federal District Court in Puerto Rico to

enjoin the investigation and to quash the subpoena.

The Litigation

IOS' lawsuit to enjoin the Commission's investigation was, in effect, a final effort to prevent the Commission from further delving into IOS' activities, such as the reciprocal brokerage and give-up arrangements, IOS' sales of interests in FOF to Americans,

the effect of its purchases and sales on the United

States markets and the conflicts of interests of its affiliates.